Where to hold sales information?
We have been liaising with our VAT specialist contacts who have confirmed the following:
The required sales information under Making tax digital (MTD) needs to be held in software somewhere, either on a supply by supply basis if a retail scheme is not used, (i.e. individually), or the daily gross takings if using a retail scheme. The Software in question here is your Vet Practice Manager System, (Vet System). However, the information required to be recorded under MTD does not all have to be in one place or one programme, provided that the digital links are in place between the different software. Our understanding is that this means you could keep the required records on your Vet System and transfer the required information for the VAT return to your bookkeeping software, provided the link is digital.
What is accepted as a digital link?
HMRC accept the following as digital links:
- Emailing the spreadsheet containing digital records so the information can be imported into another software product.
- Transferring the set of digital records onto a portable device; for example, a pen drive memory stick or flash drive, and physically giving this to someone else, who then imports the data into the software.
- XML, CSV import and export and download and upload of files,
- Automated data transfer (which would essentially be the Vet Systems linking directy to Xero/Sage/QuickBooks) and the API transfer.
What you are no longer able to do is manually enter totals into your accounting software or cutting, copying and pasting numbers, i.e. you can no longer record the sales by manually entering a customer invoice/customer receipt each month. This is not accepted as a digital link and is not compliant with the current MTD legislation.
The suggested approach is to obtain your normal monthly sales report (if on an invoice basis)/takings reports (if on a cash basis) from your Vet System and download the data into a CSV format. After checking you are happy with the figures, the totals (that you would usually process manually) should then be imported into your accounting software, which provides the Digital link that HMRC require.
Please see the step-by-step guide for doing this below:
If you record VAT on an invoiced basis:
If you record VAT on an cash basis:
If you haven’t already, you may wish to liaise with your Vet System provider in respect of this, as most have confirmed that they are able to provide the monthly sales/takings information in a CSV format.
We would mention that this approach has not been formally approved by HMRC, but it is felt that all reasonable care has been taken to comply with the MTD legislation. This is confirmed in para 4.2.1 of the VAT Notice, where you can also find more detailed information regarding ensuring that you are MTD compliant.